Question: What is the annual rate the investor would need to earn on a retirement investment?

Today’s question. People seem to be finding them easy so will up the ante a bit: At retirement 9 years from now, an investor will have the option of receiving a lump sum of $400,000 or 20 annual payments of $40,000 with the first payment made at retirement. What is the annual rate the investor would need to earn on a retirement investment to be indifferent between the two choices?

Moshe Alexander: May be 3,53% p.a.?

David Geof: afraid not

Stephan Heuler: I don’t have a formula of thumb for that. Is there one?I don’t want to run excel…..;-)